Kruger says it will “reassess the viability” of its Corner Brook newsprint mill in Newfoundland, after its proposed relief measures for pension plan funding were rejected by unionized employees.
Only one of four groups of pension plan members rejected the proposal to apply funding relief measures to its pension plan deficits.
There were very few objections to the proposal from active and retired members of the pension plan for non-unionized employees, and few objections from retired members of the pension plan for unionized employees. But, among active members of the pension plan for unionized employees, 54% objected to the proposal.
Under Newfoundland legislation, in order for the relief measures to be applied, they cannot be opposed by more than one-third of members in each group (active and retirees). Consequently, explains Kruger, the relief measures cannot be applied to the unionized employees' pension plan.
The company states that the relief measures were “absolutely necessary” to improve the mill’s competitiveness and secure its future. “In recent years, the Kruger Company has gone to extraordinary lengths to support its Corner Brook operation in a very challenging market afflicted by declining demand for newsprint, increasing energy costs and the negative effects of a strong Canadian currency on exports,” the press release states.
In addition, “the Corner Brook Mill has to contend with other Canadian paper mills that have competitive operating costs and benefit from the additional advantage of funding relief measures for their own pension plan deficits,” the press release continues.
In the days leading up to the vote on pension funding relief measures, a vocal battle took place in the local media, with the CEP union accusing Kruger holding back information regarding the pension funding formula. Kruger defended its actions a direct letter from executive vice-president and chief operating officer Daniel Archambault to union members, saying, “…creating controversy by falsely accusing the company of such maneuvers is extremely irresponsible and may jeopardize our chances to obtain the funding relief measures.
“The company never had any intention to renege on its 2005 commitment and it is appalling to hear such declarations after we have helped the Mill survive the recent recession and worked relentlessly with the unions to find solutions to secure the Corner Brook operation for the long term.”